Spending to win : political institutions, economic geography, and government subsidies

"Democratic institutions ostensibly serve the common good. Yet democratically elected leaders face varied incentives. Politicians must balance the public's welfare with demands from interest groups that run counter to the common good. Nowhere is this balancing act more apparent than in the area of economic policy. Many economic policies redistribute resources between groups. Governments collect taxes and redistribute the money via government programs. Governments could spend money on programs that support broad groups, such as universal health care or education. Alternatively, governments could use their fiscal resources to privilege small, select groups of citizens via programs like subsidies for business. Subsidies typically provide economic benefits selectively to small groups and accordingly can be described as "particularistic" economic policies. Particularistic economic policies often come at a cost to larger groups, including tax payers and consumers. Yet despite these characteristics, particularistic economic policies emerge in democratic contexts"--